Letter of Discouragement

Posted by Kris | Tuesday, February 26, 2008 | | 0 comments »

Dear Prospective Trader:

The ease of entry in this business is often deceiving. No one would dream of trying to become a lawyer or a doctor or a college professor without a proper education, but many expect to open an account and become a millionaire within a few months as a trader. Its not that simple. We have found that, to have any chance of a successful career in this business, one must first meet several requirements:

A. One must have at least $30,000.00 to start out with. To open a daytrading account, the minimum required by the government is $25,000.00. The additional $5000.00 is insurance that a bad trade will not put you under the minimum. This money must be in the bank. Borrowing, or using a credit card is NOT recommended.

B. A person needs to have enough money in the bank, or other means of income, to support one's self and one's family for one year, with NO income from trading coming in at all. It may not take you that long to become profitable, but you can not plan for the best; you must always plan for the worst.

C. One must be willing to devote from 8:30am ET to 5pm ET, 5 days a week, tolearning how to trade.

D. One must be willing to spend one to two hours each night in additional study to learn basic knowledge and to prepare for the next day.

E. One must want, more than anything in the world, to be a successful trader. "I’ll give this a try to see if it will work" will not cut it. You will surely fail.

F. One must have 100% support from one's family. I do not mean lip service here, I mean solid support. The kind of support that will make a spouse willing to eat beans for a year to see their significant other succeed.

G. One must have good teachers and a disciplined learning environment. This one is easy. MTrader will provide this for you.When you meet all of these requirements, then and only then, are you ready to consider becoming a full-time trader.Now as to the question "Can I do this part-time?" The answer is yes. The learning curve will be slower, and you will have to burn the midnight oil, but it can be done. In fact, I have often seen part-time traders do much better than those who were learning full time, for two reasons:

First of all, having outside income relieves many of the psychological pressures that sabotage the learning process. If a person feels that they “have” to trade, because they have a mortgage to pay or a family to support, they are introducing fear into their trading decisions. That fear will show up in the form of blown stops, hesitation, and early exits. They will also be more apt to push themselves into trades that really don’t meet their criteria, instead of accepting what the market offers. Having outside income frees a person psychologically, so they can concentrate on the challenge of trading, rather than the money. And that is the key to success.

Another reason why I have seen part-timers do better is because their time is often limited to the most predictable trading times. The prime trading hours are the first two hours of the day, when the volume is most active. Many beginners will make early gains, and then wind up giving those early profits away later in the day when trading slows and becomes less predictable. So many times, those who can only trade for the first two hours of the day, and are forced to go to jobs later, wind up avoiding many of the losses and form better trading habits.

I remember one man in particular who sat here trying to trade full-time for about a year, barely holding his head above water, until he finally got a job. Once he got the job, he could only trade for the first two hours of the day. But the relief and security of that job allowed him to trade much more freely. Soon he was trading much better than he ever had when he was here full-time, and he started making more money in those first two hours, than he did at his full-time job.
Now then... if I haven't scared you off yet, and you are still determined, I ask of you one thing. Please start off right, with a business plan of how you intend to acheive your goals. Treat this profession as you would any other business venture; with planning, method, structure, and realistic expectations. That is your best chance for success.